Case Study
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To do or not to do: Stratasys considers HP’s partnership offer
- Decision-making issues
The CEO and the co-founder of the Stratasys are left at the crossroads in making g a crucial decision of entering into a partnership with the Hewlett Packard. The case is an analysis of the decision of the Crump to enter into a partnership with the HP Company. The central question that the Stratasys was concerned with is whether the partnership will result in the creation of value after the two companies pool together their resources. Stratasys is the author of the 3D printers’ technology and therefore, the HP was considering to partner with the company by entering into an Original Equipment manufacturer. In the partnership, Stratasys was to manufacture the 3D printers which would be in turn sold through the HP. Therefore, the Company has to exit the market and this indicates that the HP would take over. The brand although manufactured by The Company would be sold under the HP brand. Scott Crump was therefore in crossroads with her wife on whether the two companies would enter into a partnership agreement. There are only two decided that the Stratasys would have made by the end of the day. One is to accept to partner with the Hewlett Packard. This means that it would have avoided the competition in the market with the HP company. On the other hand, the company would opt not to partner with HP. However, HP was willing to enter into the market at all costs. This means that, if Stratasys fails to partner with the HP Company, HP will be a threat to the company performance. This is based on the fact that the HP Company is 100 times bigger than the Stratasys Company.
The case identifies that the company has been experiencing an average growth from 1995 and before the financial crisis of 2008. However, it was all the time dream of the CEO and the president of the company that the company realizes 3D printers. However, the only problem was that he did not know whether there was a need to partner with HP to enhance its liquidity. Considerably, partnership with HP would lead the company to enhance its revenues to more than $0.5 billion. This could be a positive step if the company considers partnering with HP. On the other hand, HP was considering entering into the market of 3D printers considering the market growth rate. This means that they are ready to sacrifice the Two-dimensional large format printers (LFPs). Possibly, the Stratasys could lose the market share of the 3D printers if the HP would enter into the market. This is based on the fact that the HP Company has a market share of about 80 percent of the 2D printers. Considering the reputation of the HP in the global market, the CEO and the president of the Stratasys had to make a fast decision on whether or not to partner with the HP Company. At one point he thought that failure to partner with the HP Company may be the beginning of the downfall of the company. On the other hand, the CEO thought that partnership with the HP Company may make the company a smaller participant in the market. These are some of the cr5itical issues that the CEO and the President of the Stratasys had to consider. However, the key to the success of any company relies on the ability of the management to take risks.
- The cause of the identified Issues
In the industry, there were several players. However, the satisfaction of the customer in the market by different companies is different since the products that were initially offered by the HP were different from these offered by the Stratasys. There are also other players in the market including the Z-Corp, 3D Systems, and Objet who were offering similar products in the market. However, most of the companies in the market were selling 2D printers. Due to the growing change in the market, a more advanced printer was brought into the market. This means that the 3D printers could compete with the 2D printers successfully. Ideally, the HP Company was offering the 2D printers. This is a different technological solution to the final consumers in the market. However, many customers were attracted by the 3D technology. A rapid growth in the demand of the 3D printers led to the average growth of the Stratasys. On the other hand, the technology of the 3D printers in the market was not well known and this could poster a negative or a slow growth rate on the demand of the brand. Until 2008, HP had not thought to sell the 3D printers. This is the root cause of the proposal by the HP Company to partner with the Stratasys. Investing in the market indicates that, one of the companies and particularly the Stratasys would lose the market share. On the other hand, a partnership between the two companies required that the Stratasys company musty sell their brand in the name of the HP and not in their name. They were also supposed to sell the brand at a price of less than $ 25,000. However, if this happens, the company would lose its competitive advantage. The HP Company on the other hand could potentially gain the market share.
Effect of the identified issues
Based on the 2008 statistics concerning the sale of the 3D printers, the company was in a position to sell the highest number of printers. 43.2 percent of the 3D printers were sold by the Stratasys Company. This is a clear indication that the company had the highest market share in the brand. The company dominated the market of 3D printers. However, there was an increasing growth rate of the brand in the market due to its effective technology. The idea of HP to partner with the company began as a result. However, the conflict is in the terms and conditions in the partnership deed to be signed by the two companies. One of the effects of the identified issue is that the Stratasys would lose its name in the brand. This is based on the desire of the HP to allow the company to make the actual production of the brand while HP would sell the brand on behalf of the company. The other effect is that the Stratasys would become a small player in the market if they could sign a partnership deed with the HP Company. The brand would be sold as an HP brand this entails that, the company would be widely known as the owner of the brand and not the Stratasys.
- A decision on the root causes of the problems identified
The decision on the root cause of the issues identified prior in this paper is concerned with the benefits attributed to accepting the offer if the company enters into a partnership with the HP company. This entails that, the two companies would pull their resources together to benefit mutually in the industry. However, the technology of the brand is from the Stratasys Company, and therefore, the decision of the CEO of the company Scott Crump was crucial towards the general performance of the company in the long run. The ultimate decision that was to be made was first aimed at ensuring that, there is maximum, benefit from the partnership with the HP Company. This means that the partnership should only be intended at widening the revenue base of the company, while at the same time ensuring that the name of the company is upheld in the market. At the same time, a sober decision meant that the CEO of the company Crump would not lead the company into financial risks. Possibly, he thought that the partnership would put the company into more risks thus doing the company more harm than good. The decision to be undertaken was to be remarkable. It was indeed a crossroads for the CEO. He thought that the partnership will stop the HP from developing their 3D brand. At the same time, he thought that HP would ultimately betray them. Altogether, a clear agreement had to be made.
- Recommended solutions
- First, the Stratasys should accept to partner with the HP Company. This is because HP has the highest market share in the industry. Entering into a partnership with the company will enhance the sale, hence the returns realized in the long run.
- In entering into the partnership, the two companies need to draft a partnership deed that will not favor either of the two parties involved. However, a fair agreement must acknowledge that the Stratasys is the owner of the brands and deserves a higher proportion of the returns realized at the end of the day.
- Finally, there should be clear guidelines that allow either of the two parties to quit the partnership. This will reduce the risk of betrayal by HP in case the company is not ready to continue with the partnership.
References
Gallagher, R. F., Desir, R., & Albert, L. S. (2019). To do or not to do: Stratasys considers HP’s partnership offer. The CASE Journal.